The Influence of Transformational Leadership and Work Motivation on Employee Performance in MSMEs in the Digitalization Era

This study aims to analyze the influence of transformational leadership and work motivation on employee performance in Micro, Small, and Medium Enterprises (MSMEs) in the digitalization era. The rapid development of digital technology has changed the way MSMEs operate, requiring leaders to adapt and motivate employees effectively to achieve optimal performance. This research employs a quantitative approach using a survey method. Data were collected from 150 employees working in MSMEs across various sectors through a structured questionnaire. The data were analyzed using multiple linear regression to determine the impact of transformational leadership and work motivation on employee performance. The results show that both transformational leadership and work motivation have a significant and positive effect on employee performance. Transformational leadership enhances employee engagement, innovation, and adaptability, while high work motivation increases commitment and productivity. The findings imply that MSME leaders should focus on developing transformational leadership skills and fostering a motivational work environment to improve performance in the digital era. This research contributes to the understanding of leadership and motivation as strategic factors in achieving business sustainability amid digital transformation.